Examination of Witnesses (Questions 40-59)
SIR RICHARD
MOTTRAM KCB AND
MR DUNCAN
HALL
MONDAY 4 MARCH 2002
40. Why did you flout them?
(Mr Hall) I do not believe that I flouted them.
41. You do not think that you did. Let us turn
to page 25, Mr Hall. I am not making these accusations, picking
them off apple trees, without consulting evidence, I am reading
the Report. I am getting all of this information from the Report
that I am reading. You say that you did not flout the guidelines.
The guidelines say, "Do not bend or break the rules, be even
handed, record decisions. If approval is needed get it first".
Tell me, then, if you read those publications, and you say that
you did not flout the guidelines, if you turn to page 25, Case
C, you lost the taxpayer £650,000 on virtually the day it
was winding up. You had no right whatsoever to be going into new
deals, as it was, virtually the week that the Corporation was
actually packing in, yet you went ahead and at the end of the
day you lost the taxpayer £650,000. That is outrageous, is
it not?
(Mr Hall) I think there are two situations which arise
from that, the first one is whilst we were expecting to wind up
by 31 December 1997 in securing a home for our assets the Department
was well aware, together with ourselves, that we complete it,
and we did. Again, I have to say to you that if we look at a situation
some years—
42. Did you bend or break the rules?
(Mr Hall) I am not aware that I deliberately bent
or broke the rules.
43. It is quite clear to me that the guidelines
on the terms of the winding up of the Corporation clearly said
no new schemes had to be gone into yet, virtually the week that
it was winding up you went into a new scheme. If that is not bending
or breaking the rules I do not know what is.
(Mr Hall) I think that the way that Corporation was
considering these matters was to say, we have made it very clear
that we were trying to complete all of the business of the Corporation.
44. This was new business.
(Mr Hall) Yes. The business that it was involved in
involved a very major site of the Corporation which we wished
to see disposed of to the private sector, hopefully on a successful
basis. The difficulty I have, if I may say, is that I am now looking
at a situation four years on, I am looking at a situation that
was concluded two years after the end of the life of the Corporation,
but at that time I believe this to be a right and proper decision
for the Corporation.
45. Can you turn paragraph 4.5, that is on page
33 again. You seem to indicate in the Report, you appear to be
saying this afternoon, that your actions were justifiable because
your primary role was to foster regeneration by entrepreneurial
means with the private sector. I put it to you, Mr Hall, you went
far beyond anything that could be expected and regarded as acceptable.
In my view you abused your position knowing full well at the end
of day if anything went wrong you were going to be bailed out
by the Department. You spent money that Parliament had not even
granted you two years ahead and you lost the taxpayers millions
of pounds of money. That would not be accepted in the private
sector, you would be sacked.
(Mr Hall) Can I take those points on an individual
basis?
46. Of course.
(Mr Hall) The situation was that I accept the commercial
nature of the role that I took in the Development Corporation
but equally we acknowledged the rules and regulations that would
involve the Corporation. The situation which arose out of that
was that from our point of view, the Corporation's point of view,
we received 11 clean audits for the whole of the life of the Corporation.
Upon the wind up of the Corporation we, as this Report says, balanced
the books, and it is absolutely fair, in relation to what the
Chairman asked earlier regarding Teesside, that in overall terms
the Corporation actually brought in more money than it spent.
47. I was going to come on to that. I am not
going to have time by the looks of things. If you want to go down
that line, the deficit is now thought to be £23 million,
and still going up. I was going to ask Sir Richard Mottram if
he can tell us how the much the deficit is going to be at the
end of day?
(Sir Richard Mottram) I do not quite know but I expect
it might be in the region of £40 million.
48. The last question. Sir Richard has got off
the hook here because I had a lot of questions for him.
(Sir Richard Mottram) I deserve a bit of consideration,
I think!
49. We all feel that sometimes. The final question
to Mr Hall, on Appendix 2, page 45, the National Audit Office
were unable to find, "Key information such as marketing and
disposal files and contract files with the developers", they
are just not there. They have been destroyed. Now I am not a suspicious
man at all but I wonder why these were destroyed. It makes me
think, Mr Hall, that this is just the tip of the iceberg, that
there are many, many more things that should come out, and will
come out and, hopefully, the Department will not let it run?
(Mr Hall) The situation referred to, I repeat my previous
answer, there is no question whatsoever of the Corporation deliberately
shredding files. There is a very clear system put forward by the
Corporation in relation to the documentation, both in terms of
the legal audit it undertook and in relation to the general files
which it had. Frankly, I cannot explain why those files cannot
be found or some of those files cannot be found. There is absolutely
no question whatsoever of anybody deliberately dealing with those
files on a deliberate basis.
Mr Steinberg: Thank you.
Mr Williams
50. Sir Richard, that was a staggering figure
you just gave my colleague when you said that the possible deficit
would be £40 million?
(Sir Richard Mottram) Yes
51. At the time of the close down they were
actually prophesying a surplus of £14.5 million, so we have
seen a turnaround of £54 million. That really is an incredible
figure failure, not on your part but on the Corporation's part?
(Sir Richard Mottram) As the Report brings out I do
not think that the resource position statement that was submitted
by the Corporation in April 1998 could be defended. What has happened
is that progressively as English Partnerships have sought to unwind
the various positions, so to speak, the costs have been rising.
52. I must say that I think Sir Richard certain
remarks attributed to you last week seem highly relevant in the
context of receiving this staggering figure.
(Sir Richard Mottram) I wondered how long I would
get before that was referred to.
53. Mr Hall, when you were appointed did anyone
tell you not to worry about the rules?
(Mr Hall) Not to worry about them. It was perfectly
clear that we received the UDC Guidebook and guidance in relation
to—
54. Did anyone tell you that you did not need
to worry about the rules?
(Mr Hall) No.
55. It was all your own idea?
(Mr Hall) What was?
56. You may laugh like that. For example, the
Department got in touch with you about deferred payments to contractors,
which is strictly outside the rules, when they asked you, you,
according to the Report in 2.18 said, "I am aware of the
rules".
(Mr Hall) Yes.
57. You were aware of the rules, you were just
not working according to the rules, were you?
(Mr Hall) What we were endeavouring to do, and again
I had not appreciated that was, indeed, a breaking of the rules,
that with the negotiations, with the contractors we were in a
position to sustain the regeneration which was taking place.
58. You see if that were an isolated example,
one could say, let us look at your record, let us wipe this one
off against the others. There are rules on government accounting,
you ignored those; there are Treasury rules, you ignored those;
there are departmental rules, you ignored those; there is a book
of guidance, you ignored that; there was a letter to you from
the Secretary of State emphasising the importance of restitute
and you ignored that. This sounds like a calculated attitude on
your part.
(Mr Hall) It was most certainly not a calculated attitude
on my part. It may sound extremely surprising to you that we did
not consider in the Corporation that we were bending or breaking
those rules.
59. You spent £34 million outside your
delegated authority and did you not think that was breaking the
rules.
(Mr Hall) In relation to?
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